Recently, Trump has applied severe tariffs on the US’s trading partners, which will impact the Australian economy too. Research says that Australians may see a shift in interest rates soon. Experts are divided on whether there will be more rate cuts or not. This is because recently the RBA held the cash rate at 4.10% so there may be no more rate cuts.
But what actually will happen? Can we expect another rate cut now? Or will the RBA take some other measures now? How will all this impact home loan rates?
Ongoing Discussion On Rate Cuts
One Side of Experts
Earlier, prior to August 2025, no cuts were normally expected, but experts are hoping for more rate cuts, starting as early as May. Trump’s decision on 10% tariffs on all imports will lead to a global impact, and it’s a concern for Australia too. The global impact may slow down markets here, even though less than 5% of Australia’s exports are directed to the US.
Looking at this fact, some experts believe there will be more rate cuts in the remaining part of the year. The RBA is expected to act quickly to protect Australian households from reduced spending and declining confidence in the property market. Instead of waiting to see a big drop in the economy, they may act early to reduce the impact.
Other Side of Experts
Meanwhile, the other side of experts believes that there’ll be no further rate cuts. This is because the RBA recently held the cash rate at 4.10%, looking at the inflation scenario. So, it might take some other measures to control the impact of Trump’s decision on all the markets.
They justified this fact, stating that just in February 2025, RBA reduced the cash rate from 4.35 to 4.10%. Therefore, to control these political and economic tensions, there’s a high likelihood for the RBA to take other measures.
So will it affect mortgage home loan rates then?
Estimated RBA’s Decision Impact on Mortgage Home Loan Rates
Well, looking at the predictions, if the RBA decides to cut its rate, it will likely improve borrowing capacity. This is because the home loan rate gets reduced, which in turn will improve the mortgage holders’ confidence. For example, with a 0.25% rate cut, mortgage holders could save around $91/month on a $600k mortgage.
Now, if more rate cuts occurred, say by 0.50%, then it would improve mortgage holders’ savings to $181 per month. Likewise, if the rate is cut by 0.75%, it will save up to $269 per month for mortgage holders. That means, whatever decision the RBA takes, it will impact home loan rates and so the mortgage holders’ savings.
But how will this broadly impact the entire property market?
Impact on the Australian Property Market
If other rate cuts happen, home loan rates will get cheaper. The overall number of borrowers will rise as a result. Meanwhile, this will also increase the demand for affordable home buying, which will force the government to build new homes. Moreover, the shortage of houses may push property prices in high-demand areas like Melbourne, Sydney, and Brisbane.
Existing homeowners may also rush to refinance at lower interest rates to reduce their repayments. Investors may, too, come back into the market with strategies like negative gearing. Additionally, since regional markets are affordable, growth suburbs may seek the attention of investors.
However, despite rate cuts, rising property prices due to high construction costs may wipe out the benefits of rate cuts. This is because higher tariffs on building materials, especially from China, might raise construction costs. As a result, it may slow down supply and make homes pricier than expected.
Therefore, currently, the future of the home loan rate depends highly on the RBA’s decision on further rate cuts. Until then, we can just wait and better plan for our investments and finances.
So, what’s your call for your other investments?
Get your valuable guidance by reaching us at Nfinity Financials or just give a call to our experts at 1300 GET LOAN or 0456 456 267.
